Dream island bridges the strait

PUBLISHED : Tuesday, 01 May, 2012, 12:00am
UPDATED : Tuesday, 01 May, 2012, 12:00am


Taiwanese real estate developer Lee Yun-hui has never seen so many Taiwanese investors visiting Pingtan since he migrated to the remote and underdeveloped island off Fujian province's in 1994.

Tens of thousands of Taiwanese entrepreneurs, including Kao Koong-lian, vice-chairman of Taiwan's Straits Exchange Foundation, have visited Pingtan since Beijing vowed in November to invest more than 250 billion yuan (HK$306 billion) by 2015 to transform it into a 'Little Taiwan'.

The irony is rich. Before 1996, Beijing used Pingtan - the closest mainland territory to Taiwan, only 126 kilometres away - to stage massive military manoeuvres for the forcible 'liberation' of Taiwan.

Now Beijing wants to bring Taiwanese and their investments there - in a big way. They'll do it by allowing the island to form a joint government with Taiwanese officials, permit Taiwanese currency to circulate and reduce income taxes for Taiwanese who work there.

But so far, most of those curious entrepreneurs are just looking.

'People came and left because Pingtan island lacks the basic infrastructure and industrial chains for industrial development,' Lee said. 'Only 50 to 60 Taiwanese logistic and trading companies have registered in the island so far, but they'll have to wait at least two years before the infrastructure is ready.'

In fact, the island doesn't even have a water purification plant, power station or sewage and garbage treatment facilities.

Lee is one of only 20 Taiwanese living on the island. His father, a native of Pingtan, fled to Taiwan in 1949 and returned in 1987 and started to invest in the island's housing market in the 1990s. Lee and Pingtan's other real estate developers will surely be among the first to benefit from Beijing's endorsement.

Amid crazed speculation over Pingtan's cross-strait future, the island's housing prices have soared to 12,000 yuan per square metre this year from 1,500 yuan in 2006 - an eight-fold increase. Land that cost some 30,000 yuan several years ago is now priced at more than two million yuan.

But not everyone is as lucky as Lee's family. Taiwanese boutique owner Shiue Ching-de, who migrated to Pingtan in 2000 after a 7.3-magnitude earthquake rocked his hometown in September 1999, destroying most of his properties, said he could not see why manufacturers should invest on the island simply because it's the closest mainland territory to Taiwan, as Beijing has advocated.

'The island's 400,000 residents have long been tormented with frequent blackouts and insufficient drinking water, even when there's no large-scale factories,' Shiue said. 'Water supply had been suspended for 40 to 50 days just three months ago, and thirsty villagers were forced to dig wells for drinking water.'

The boutique owner had to equip each of his five shops with power generators because the electricity tends to go out for four to six days every month. He listed more inconveniences to doing business: clothes imported from Taiwan need to be sent to Guangzhou by air first. It then takes a week to transport them to Pingtan by road because problems with airports, ports, highways and railways.

'The time and cost consuming logistics add 15 to 18 yuan cost to every kilogram of clothes I imported - very expensive,' he said.

Overheated speculation on real estate also forces Shiue to pay rent of 400 yuan per square metre per month for his boutiques - that's 320,000 yuan for a tiny, 68-square-metre shop a year.

'I don't think many Taiwanese retailers and manufacturers can afford such a rent,' he said. 'It's even higher than many places in Taiwan.'

TPV Technology is one of the few Taiwanese companies that has decided to invest in Pingtan. The maker of monitors and flat-screen televisions will have to spend nearly 60 per cent of its US$140 million investment on building a logistics chain and support facilities.

Only US$60 million will be spent on the production line. Fujian's Xieli Group has to spend more than 40 per cent of its 5.7 billion investment on supporting facilities.

But Beijing says these problems will disappear after it spends hundreds of billions yuan under its investment scheme.

'[I] believe Pingtan will be transformed into a modern metropolis within less than 10 years,' Fujian governor Su Shulin said during a visit in March to Taiwan's Hsinchu city to promote the island.

He noted that at one time, the Shenzhen special zone didn't have any industrial foundation, either.

Planned infrastructure includes building a second bridge connecting the island with nearby Fuqing city, this one combining an expressway and high-speed rail to connect the remote island with Fuzhou and Beijing. An airport is also planned.

New pipes and cables under construction will send water and power from Fuqing to Pingtan. The island will also have a new reservoir, water purification plant, sewage treatment plant, three power substations, wind energy plant and garbage incinerator.

Five large-scaled berths, costing over 2.4 billion yuan, and a 100-kilometre ring road encircling the island are under construction. The berths will focus on direct shipping with Taiwan and have an annual capacity of one million passengers, 250,000 cars and 2.6 million tonnes of cargo for ferries, international cruise ships and cargo vessels.

Logistic centres, industrial parks, universities, hospitals, parks, a museum and luxury hotels including a Sheraton - they're all coming to the island, Gong Qinggai , director of Pingtan Comprehensive Experimental Zone, has said.

However, not every infrastructure investment might pay off. A new cross-strait ferry service launched in November, linking Pingtan with Taiwan's Taichung, is down to only 12 daily trips because of low passenger numbers. Most of the customers are mainland tourist groups seeking a travel bargain - not the Taiwanese the service was intended to draw.

Desperate for talents, the island plans to recruit 1,000 Taiwanese experts within five years, offering salaries and benefit packages 'higher than Taiwan's standard' and lower income taxes. Taiwanese television channels will be able to air on the island, once the government approves.

Newspapers and books published in Taiwan might be allowed to circulate on the island. The island is also considering allowing Taiwan's Hsinchu county to develop and manage a two-square-kilometre area and keep the revenues.

Lee said Beijing's political thinking about Pingtan is clear.

'The mainland government doesn't mind spending some money to lure Taiwan's lower middle and underclass to live in Pingtan, as they're the main groups that oppose the Communist Party,' he said. 'The rich who have business connections with the mainland generally hold moderate opinions towards Beijing, and they are more likely to seek opportunities in metropolises such as Beijing or Shanghai.'

He said Beijing would offer subsidies to Taiwanese companies and individuals in Pingtan 'because the mainland government doesn't want the Taiwanese they buy over to suffer any loss.'

Chang Jung-Feng, a research director from the Chung-Hua Institution for Economic Research in Taipei, said Taiwan should be wary of Pingtan's strong political orientation, but he doubted many Taiwanese businessmen will be attracted, because of the poor infrastructure. 'The mainland's political attempt won't change and the West-Taiwan Strait Economic Zone it promoted won't eye only economic exchanges,' Chang said.

Liu Te-shun, a spokesman for Taiwan's Mainland Affairs Council, has told Taiwanese media that many of the infrastructure projects on Pingtan could take 10 to 15 years, making it too risky for medium-sized and small enterprises to invest there.

'[Mainland said it'll] turn Pingtan into a cargo distributing centre, but where're the cargoes?' Liu said. 'What's the point of shipping cargoes to Pingtan if they can be sent directly to Shanghai? How can you persuade Taiwanese businessmen simply because Pingtan is close to Hsinchu?

'Pingtan is much underdeveloped when compared with the Pearl River and Yangtze River deltas and Bohai Bay,' he said. 'Many Taiwanese businessmen can't wait until basic infrastructures are ready.'

The council issued a statement denying the Pingtan Comprehensive Experimental Zone is a 'co-pilot' project sponsored by the Taiwanese government, saying Beijing's claims of 'joint planning, joint development, co-operation, joint management and joint benefits' aren't true. It urged the mainland to focus on economic aspects and 'remove unnecessary political factors.'

Wang Yi, director of the mainland's Taiwan Affairs Office, reiterated last month that Pingtan is neither a political project nor a pilot for a future 'one country, two systems' arrangement with Taiwan.


The time, in hours, taken by the high-speed ferry linking Pingtan and Taichung city in Taiwan. The service opened in November last year